In a surprise move, General Electric CEO and President Jeffrey Immelt unveiled a plan to greatly shrink the industrial giant’s finance arm — a key driver of earnings for years.

Immelt said Friday the company would sell the bulk of its $499 billion finance unit, GE Capital, and focus on its core industrial businesses ranging from jet engines to medical devices.

That marked a far more drastic downsizing than expected. Immelt told analysts in the fall that he planned to reduce the size of GE Capital to represent about 25 percent of earnings, down from 30 percent.

Under the new plan, the finance unit will account for less than 10 percent of profits by 2018.

The sudden shift in strategy sparked speculation on Wall Street that an activist investor had started to agitate behind the scenes.

“If an activist came in GE, I think it would more likely capitulate than fight,” one GE analyst, who asked to remain unnamed, told The Post.

The company’s shares are down 22 percent over the past decade even after Friday’s bump. Shares surged 11 percent, to $28.51, the largest one-day jump since the financial crisis.

GE also announced it is buying back up to $50 billion of its own shares in a bid to goose its stagnant stock price. The company’s annual shareholder meeting is slated for April 22.

“It is totally untrue that any activist was involved in this decision. This was completely driven by Jeff and the Board,” a GE spokesman said.

A source close to the industrial conglomerate said it had become clear to Immelt that the company’s growing aircraft engine and power generation businesses were not being valued by investors and that GE Capital was dragging down earnings.

Like Wall Street banks, the finance unit had suffered in the wake of the financial crisis. Record low interest rates and tighter regulations made it harder to find growth.

Immelt has been CEO since 2001, and even in the depths of the recession, stood behind GE Capital, which represented roughly half the company’s earnings.

He might have been reluctant to sell the business his predecessor, Jack Welch, had built, but has since made up his mind that there are no sacred cows, said one source close to the company.

GE Capital has a deal to sell its real-estate holdings to the Blackstone Group and Wells Fargo for $26.5 billion. Blackstone will be acquiring the real-estate equity that is mostly office buildings.

GE will take a $16 billion after-tax charge in its first quarter earnings for the real-estate deal.

Overall, GE could return $90 billion to investors through dividends, the buyback and the Synchrony North American consumer finance business spin-off exchange.

Wall Street cheered the new, bolder plan.

The company “is on its way to being a pure play global infrastructure company,” Barclays said in a note to clients.